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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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An insurance company has made a cash offer for a customer who

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An insurance company has made a cash offer for a customer who we have been acting for. We are a V.A.T registered company and need to invoice the insurance company, however we will then be passing the money onto the customer less our fee. So we cannot charge V.A.T. on the sum from the insurance company. Are we able to invoice the insurance company with no V.A.T. and how do we do this?
for example purposes the insurance company have offered £110,000 which we need to invoice for, we will transfer this amount less £11,000 (Our fee) to the client. Do we only need to pay V.A.T. on the £11,000?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

As you are making a cash settlement claim on behalf of your client and then passing the funds to the client, this would be an exempt supply and no VAT would be charged on the claim.

The amount you charge the client for services rendered would be a standard rated supply and chargeable to VAT.

VAT amount would depend on what you have agreed with the client on whether the fee of £11,000 is inclusive or exclusive of VAT.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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